How To Get A Mortgage In Scotland

If you’re looking to buy a house in Scotland, then rest assured that the process is not very different from that of the rest of the UK.

Ensuring you meet the lender’s affordability requirements and lending criteria of course, is crucial. Once you do, you’re on your way to securing a mortgage. 

Most lenders in Scotland as like the rest of the UK will base their pricing on the rates set by the Bank of England, 

Certain small but important differences must be considered when understanding the Scottish mortgage process. 

So, let’s not wait any longer and dive into how to get a mortgage in Scotland.

What’s the Difference Between the Rest of the UK and Getting a Mortgage in Scotland?

One of the most important differences that you need to keep in mind when applying for a mortgage in Scotland is that you’ll need to have a solicitor who will place the offer on the property for you.

This makes the offer more legally binding and increases the chances of approval which is a key difference to the rest of the UK where the process differs.

Another difference is that instead of the usual Stamp Duty, Scotland imposes the Land and Buildings Transaction Tax (LBTT). 

The rates for this will most likely differ from those associated with the rest of the UK.

However, one good news is that buying properties in Scotland is typically faster, and the entire process should be completed in around 8 weeks. Of course, each transaction will be different. 

Eligibility Factors To Get A Mortgage In Scotland

As with the rest of the UK, eligibility criteria for mortgages in Scotland vary from lender to lender, and it’s best to work with an experienced broker to get the right deal for you. 

The following are some of the key factors to keep in mind:

1. Affordability Criteria

One of the most important factors of course, is that you meet the lender’s affordability criteria. 

Lenders usually decide this based on your annual earned income and may even include other sources of income, such as child maintenance and even bonuses within their assessments. 

Most Scottish lenders will allow you a mortgage amount that is 4.5 times your yearly income. However, based on the situation, you can even get 5-6 times that amount with certain lenders. Once again, we must caveat that affordability criteria is very lender-dependent. 

2. Credit History

As with any other mortgage, your credit history is another important factor in determining whether your mortgage is granted or not. 

If you have a good credit history, then all is well. But missed payments, poor financial past, or similar red flags might require you to put down a larger deposit or agree to higher interest rates.

3. Deposit Amount

The deposit required for a Scottish mortgage is almost the same as any other mortgage all over the UK. 

However, as mentioned above, a poor credit history might force you to put down a higher deposit to offset the lender’s risks.

4. Miscellaneous Factors

Apart from the above, the property type, your employment type, age, and current assets can also play a role in the application process.

To get an idea of how much you can borrow, you can use this affordability calculator.

Potential Mortgage Schemes Available In Scotland

1. LIFT

LIFT, or the low-cost initiative for first-time buyers is a shared equity scheme that helps first-time buyers buy a home.

LIFT is exclusive to Scotland and has two variants: the New Supply Shared Equity Scheme (NSSE) and the Open Market Shared Equity (OMSE) scheme.

NSSE is for first-buyers to purchase property from housing associations or local councils. The OMSE is similar but targeted towards properties on the open market.

2. LISA

The Lifetime ISA has replaced the Help To Buy ISA and lets buyers in the age bracket of 18-39 save money to buy their first home or save for retirement. 

In this scheme, you are allowed to save up to £4,000 a year, and you get a 25% bonus from the government.

Mortgage Lenders For A Scottish Mortgage

Most large banks, such as Natwest, HSBC, and Halifax, can offer you a mortgage in Scotland. However, some banks and building societies restrict their lending to the Scottish mainland or to certain postal codes only. 

For example, Leeds Building Society will only consider the Scottish mainland and the Isle of Skye. 

Similarly, Furness Building Society also offers mortgages only on the Scottish mainland and limits the amount to 75% LTV. 

TSB, on the other hand, also includes the Orkney Islands, the Hebrides, the Shetland, and the Clyde Islands.

Remortgaging a Property in Scotland

If you want to remortgage a property in Scotland, the process is pretty much the same as in the rest of the UK. 

Frequently Asked Questions (FAQs)

1. Can People From Other Countries Buy Property In Scotland?

Yes, foreigners can buy property in Scotland and get mortgages for it as long as they meet the eligibility criteria. However, if they want to live there, they would need to provide proof of residency. 

2. Is It Possible To Get A 100% LTV Mortgage In Scotland?

Realistically no, the only caveat to this would be in very special circumstances, and you’ll also need to agree to higher deposit and/or interest rates. If purchasing shared ownership, there are a few lenders that will allow a 100% purchase of the share subject to eligibility criteria. 

3. What Is A Home Report In Scotland?

Home Report is a document that sellers need to present to prospective customers about the property in question. This should not be more than 12 weeks older from the point the property is put up for sale.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.